An investment exposed to exchange-rate risk is a(n) _____ international investment.

Question

Quizplus · Accepted Answer

An uncovered international investment is one that is exposed to exchange-rate risk, meaning that changes in the exchange rate could significantly impact the return on investment. Covered international investments involve a strategy to protect against currency fluctuations, such as through the use of forward contracts or currency options. Hedged investments involve similar protective measures, while arbitrage involves taking advantage of price discrepancies between markets.

An Investment Exposed to Exchange-Rate Risk Is A(n) _____ International